BEIJING: China’s economy is expected to grow 6.9 percent this year, largely in line with the official target of around 7 percent, an annual report by the Chinese Academy of Social Sciences said yesterday.
The think tank cited an inefficient relocation of capital and the holding back of fiscal spending as factors behind the slowdown from last year’s pace of 7.3 percent.
“The government should try to find the areas where investment can best spur growth,” the report said. “It is wrong for officials to hold back fiscal spending, which is a major reason for the sluggishness in the economy.”
China now relies on infrastructure construction and consumption rather than manufacturing to drive the growth, said the report. The next five years will be critical for China’s economic transition to a slower and steadier growth.
China aims to cut reliance on exports and investment, which used to be the two pillars of the economy. It now wants consumption to be the largest driver of the economy. But a faltering economy in the past few months have foiled the government’s aim.
China’s economy grew 7 percent in the first half, better than the previous market expectations of a 6.8 percent expansion that was below the full-year target of 7 percent.
The National Development and Reform Commission, China’s top economic planner, yesterday said the country’s economic growth remains in a reasonable range.
“The economy has been generally holding steady this year and the underlying trend has been positive,” Xu Shaoshi, head of the NDRC, said at a meeting attended by Chinese and US business leaders.
Xu highlighted the positive signs of more consumption and a booming service sector, as well as recent recovery in industrial output, power generation, infrastructure construction and the property market.
But data in the past few months, including trade, manufacturing, and fixed-asset investment, have all eased, casting a shadow over the economic outlook for the rest of the year.
The latest data showed China’s trade fell again in August, with exports dropping 6.1 percent and imports diving 14.3 percent. The official Purchasing Managers’ Index, a gauge of the operating conditions in the state-owned manufacturing sector, fell to 47.3 last month.
